Gold faces risk of a sharp breakdown as support comes under pressure
Gold has struggled to behave like a safe haven as the US dollar, bond yields and oil prices rise. A descending triangle pattern suggests a break below support could expose deeper downside.
Founder, Mott Capital Management
Gold is struggling to act like a safe haven
Gold prices have come under pressure as oil prices and bond yields rise, while the US dollar continues to strengthen. Although gold is often viewed as a safe-haven asset, that has not been the case since March, when tensions in the Middle East began to escalate.
Instead, gold has traded more like a risk asset, and that dynamic may continue if higher rates and a firmer dollar keep weighing on demand for non-yielding assets.
A descending triangle is forming around support
Gold has been in a major downtrend since mid-May and has failed several times to move beyond its 20-day moving average. Since mid-June, the metal has found support in the $3,950 to $4,050 region.
Taken together with the prevailing downtrend, that support area appears to be forming a descending triangle. These are typically viewed as bearish continuation patterns, meaning the risk is that consolidation resolves lower once support gives way.
If the $3,950 to $4,050 region breaks, the next area of technical support appears to sit around $3,650.
Gold - Cash, 2026 - present
Sources: TradingView, Michael J Kramer
Momentum still points lower
Momentum remains bearish. The relative strength index has been trending lower and has repeatedly failed to move above 47, suggesting the momentum trend has not changed.
Unless the relative strength index can move above 50, any visual improvement in the price chart would remain unconfirmed. For now, the technical picture still points to downside risk rather than a durable reversal.
What could change the setup
The bearish case would look less convincing if gold could reclaim the 20-day moving average and push momentum back above neutral territory. A softer US dollar, lower bond yields or a clearer return of safe-haven demand could also help stabilise the metal.
Until that happens, however, the balance of risks remains tilted towards a test of support and the possibility of a sharper breakdown if sellers regain control.
Gold risks a major breakdown as key support comes under pressure
Gold is holding just above a key support zone around $4,375 to $4,485, but the chart is starting to resemble a large descending triangle. If that floor gives way, the metal could slide towards $4,000 as a firmer dollar, higher real yields and elevated oil prices add to the pressure.
